Congress Passes Foreign Extortion Prevention Act, Expanding Federal Criminal Liability to Foreign Officials

• Publication year: 2024
• Citation: Vol. 1 No. 3

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Mark F. Mendelsohn, H. Christopher Boehning, John P. Carlin, Lorin L. Reisner, Michael E. Gertzman, and David Kessler ^*

In this article, the authors discuss the new Foreign Extortion Prevention Act.

Congress has passed the Foreign Extortion Prevention Act (FEPA) ¹ with bipartisan support as part of the National Defense Authorization Act for fiscal year 2024, and President Biden has signed the defense bill into law.

FEPA establishes criminal liability for foreign officials who "corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value" from (1) any person while in the territory of the United States, (2) a U.S. issuer, or (3) a domestic concern, in exchange for an improper business advantage. ²

With FEPA enacted as a complement to the U.S. Foreign Corrupt Practices Act (FCPA), ³ the U.S. joins a host of strategic allies in a growing multilateral effort to criminalize demand-side foreign bribery as well as supply-side. ⁴

Background

The FCPA's anti-bribery provisions criminalize the payment of anything of value to a foreign government official for certain business-related benefits. ⁵ FEPA serves as the long-awaited companion to the FCPA by extending criminal liability to foreign government officials who demand or receive improper payments from U.S. persons or while in U.S. territory. Receipt of those payments is not currently covered by the FCPA.

Although FEPA amends the federal domestic bribery statute, ⁶ it borrows heavily from the FCPA. FEPA's definition of "foreign

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official" is, however, broader than that of the FCPA because it encompasses not only those individuals acting in an official governmental capacity but also those acting in an unofficial capacity. ⁷ In addition, FEPA expands the definition to include "any senior foreign political figure," which encompasses certain current or former senior foreign officials (whether elected or not); politicians; executives of government-owned commercial enterprises and their family members, close associates, and businesses. ⁸

FEPA also incorporates a similar jurisdictional framework to the FCPA by encompassing offenses that occur in or with a sufficient nexus to the United States, including where the conduct occurs within a U.S. territory, the demand is of a company that issues U.S. securities or the demand is directed at a U.S. "domestic concern," including U.S. citizens, nationals, and business entities.

The U.S. Department of Justice (DOJ) has previously leveraged U.S. anti-money laundering laws to prosecute foreign government officials involved in bribery schemes, ⁹ so FEPA is likely to make the DOJ even more active in this space. If the bill is signed into law, in the months ahead, the DOJ will likely announce and begin to implement an enforcement program. We also expect DOJ to provide guidance about which part of DOJ's Criminal Division will have primary enforcement authority for FEPA and the extent to which companies seeking FCPA resolutions may also be required to cooperate with FEPA prosecutions. FEPA prosecutions may also raise legal issues for U.S. courts to resolve, including with respect to prosecutions of foreign officials who seek bribes from entities they do not know are U.S. issuers or domestic concerns. FEPA also requires the DOJ to submit an annual report to Congress noting activity under the statute and enforcement efficacy. ¹⁰ Penalties under FEPA include imprisonment of up to 15 years and fines up to the greater of $250,000 or three times the value of the bribe. ¹¹

Notably, members of Congress have explicitly linked FEPA to concerns...